The High Court has ruled that the Non Principal Private Residence (NPPR) charge is a deductible expense against rental income for Income Tax purposes.
The NPPR was levied at a rate of €200 per residence for the years from 2009 to 2013. It was very unpopular and was widely seen as unfair and discriminatory against property owners, not least because of the outrageous penalty charges for late payment.
On top of this, Revenue claimed the charge was not tax-deductible, as it did not meet the definition of “a rate levied by a local authority” as set out in tax legislation.
This did not make sense to me, nor to many other accountants and tax professionals, but without proper clarification it was widely deemed to be dangerous and perhaps irresponsible to claim the NPPR charge as a tax deduction.
Late last year, a man named Thomas Collins bravely challenged this anomaly in the High Court, and Ms. Justice Reynolds ruled in his favour on 28 November last. The decision has now just been published.
Its timing is unfortunate in that the Revenue “four-year rule” on tax refunds means that taxpayers who followed Revenue’s own guidance and opted not to claim tax deductions for the annual NPPR charges up to and including 2012 cannot now do so, as the time limit for 2012 claims expired on 31 December 2016.
Ironically, had the High Court decision been made public when it was made in November, this would have allowed a one-month window for taxpayers to seek deductions for their 2012 NPPR charges. This wasn’t done and the window is now closed.
It is still up to everyone who has yet to claim a tax deduction for their 2013 NPPR charges on rented properties to do so by the end of 2017.
Notwithstanding this, it is clearly unjust that it is now too late to claim the appropriate deductions for the 2009, 2010, 2011 and 2012 charges.
Hopefully somebody as equally brave and diligent as Thomas Collins will go to the High Court and successfully challenge this injustice.